As the President Trump signs the Consolidated Appropriations Act, 2021 (the “Act”), employers are expected to receive additional benefits from the employee retention tax credit enacted under the CARES Act. The credit was designed to provide a refundable tax credit for companies that continue paying their employees. Here are some of the highlights of the key changes included in the bill:

• The Act extends the availability of the credit to companies who received PPP loans. The Act allows employers who received PPP loans to remain eligible for the employee retention credit with respect to wages that are not counted as forgiven payroll costs under the PPP.
• The Act extends the availability of the credit to the first two quarters of 2021.
• The amount of credit is 50% of the qualified wages paid to the employee, plus the cost to continue providing health benefits to the employee paid between March 12, 2020 and December 31, 2020. Effective January 1, 2021, the credit amount is increased to 70% of qualified wages, which is amended to include the cost to continue providing health benefits. Therefore, whereas the credit was capped at $5,000 ($10,000 in qualified wages X 50%), effective January 1, 2021, the credit cap is increased to $7,000 ($10,000 in qualified wages X 70%).
• The Act lowers the bar on reduction in gross receipts from 50% reduction in gross receipts to 20% reduction.